Diamond Alternative Energy, LLC v. EPA
606 U. S. ____ (2025) (2025)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
For purposes of Article III standing, plaintiffs challenging government regulations that indirectly cause them economic injury through the predictable actions of regulated third parties satisfy the redressability requirement when there is a 'predictable chain of events' showing that judicial relief would likely reverse the injury, even without affidavits from the directly regulated parties.
Facts:
- The Environmental Protection Agency (EPA) approved California regulations under the Clean Air Act that mandate automakers produce more electric vehicles (EVs) and fewer gasoline-powered vehicles, with the goal of reducing emissions from liquid fuels.
- California's regulations also require automakers to limit average greenhouse-gas emissions across their vehicle fleets sold in the state.
- California's own estimates predicted that these regulations would cause substantial reductions in demand for gasoline, exceeding $1 billion by 2020 and over $10 billion by 2030.
- Several fuel producers, including Diamond Alternative Energy, American Fuel & Petrochemical Manufacturers, and Valero Renewable Fuels Company, manufacture and sell fuels such as gasoline, diesel, and ethanol.
- The fuel producers asserted that EPA's approval of California's regulations was unlawful because they targeted global climate change rather than local California air quality problems, as required by the Clean Air Act.
Procedural Posture:
- In 2022, after the EPA reinstated approval of California’s 2012 regulations, several fuel producers (petitioners) sued EPA in the D. C. Circuit, challenging EPA’s authority to approve the regulations under the Clean Air Act.
- California, along with other States that adopted California’s regulations, intervened in the D. C. Circuit to defend EPA’s approval.
- The D. C. Circuit held that the fuel producers lacked Article III standing, finding they failed to establish that automakers would likely respond to invalidation of the regulations by producing fewer electric vehicles and more gasoline-powered vehicles.
- The Supreme Court of the United States granted certiorari limited to the question of whether the fuel producers have Article III standing.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Do fuel producers have Article III standing to challenge the Environmental Protection Agency's approval of California regulations requiring automakers to manufacture more electric vehicles and fewer gasoline-powered vehicles, when the producers' injury is indirect and their redressability relies on how unregulated third-party automakers would respond to invalidation of the regulations?
Opinions:
Majority - Justice Kavanaugh
Yes, the fuel producers have Article III standing to challenge the Environmental Protection Agency's approval of the California regulations. The fuel producers' injury-in-fact (monetary losses from decreased fuel sales) and causation (EPA's approval enabling regulations that reduce liquid fuel purchases) are straightforward and undisputed. Regarding redressability, the Court found it 'likely' that invalidating the California regulations would result in more revenue for the fuel producers from additional fuel sales, satisfying even the minimal 'one dollar' requirement. The Court reasoned that the fuel producers could be considered 'objects' of the regulation, or at least linked businesses suffering downstream economic injuries, presenting a 'familiar' circumstance where government regulation of one business (automakers) predictably affects another (fuel producers). Commonsense economic principles suggest that regulations designed to reduce fuel use, when invalidated, would likely lead to increased fuel use. Furthermore, EPA's and California's own actions and statements—their continued enforcement and defense of the regulations, their past acknowledgments of the regulations' importance and impact on fuel demand and emissions, and predictions from intervening automakers about competitive advantages—undermined their argument that invalidation would have no effect. The Court rejected the argument for requiring expert economist affidavits or directly regulated third-party affidavits, stating that plaintiffs must only show a 'predictable chain of events' and that such a heightened requirement would unfairly close courthouse doors to many challenges to agency action. The Court concluded that the totality of record evidence, combined with commonsense inferences about market realities, readily demonstrated standing.
Dissenting - Justice Sotomayor
The Court should have vacated the D.C. Circuit's judgment and remanded the case for reconsideration rather than deciding the standing question on the merits. The D.C. Circuit's standing analysis was partly predicated on a factual misunderstanding that both of California's vehicle-emissions rules would expire with model year 2025, when in fact only one component (the electric-vehicle mandate) does, while fleet-wide emissions limits continue indefinitely. This factual error meant the D.C. Circuit never properly assessed redressability for the indefinite portion of the regulations. Remanding would allow the lower court to reconsider its analysis based on the corrected regulatory timeline. Furthermore, the case may soon become moot anyway, as the current administration is likely to withdraw the challenged waiver, making the Court's decision to press forward on a fleeting legal issue an unnecessary use of judicial resources.
Dissenting - Justice Jackson
The Court's decision to resolve the standing question in this case, despite its imminent mootness and the potential for selective application of standing doctrine, risks eroding public trust in the Judiciary. The Court should have denied certiorari, held the case in abeyance pending EPA's reconsideration, or simply vacated and remanded. The majority's reliance on 'commonsense economic principles' for redressability is problematic because it requires guesswork about how independent third parties (automakers and consumers) would respond to judicial relief, especially given the contradictory record evidence indicating that automakers were already exceeding mandates and consumer demand for electric vehicles was surging, independent of the regulations. The fuel producers, as the party invoking federal jurisdiction, failed to adduce sufficient evidence to support their redressability theory, primarily relying on outdated statements. This lenient approach to standing for business litigants contrasts sharply with the Court's more stringent stance in cases involving civil rights or less powerful plaintiffs (e.g., Warth v. Seldin, Allen v. Wright, Clapper v. Amnesty Int’l USA), where similar 'commonsense' inferences about third-party behavior were deemed insufficient. This inconsistency reinforces a perception that the Court is overly sympathetic to corporate interests, damaging the ideal of 'Equal Justice Under Law'.
Analysis:
This case clarifies the Article III standing requirements for plaintiffs suffering indirect economic injury due to government regulation of third parties. By affirming that 'commonsense economic principles' and a 'predictable chain of events' can establish redressability without demanding exhaustive evidence from regulated third parties, the Court potentially lowers the evidentiary burden for certain challengers to agency action. This ruling reinforces the principles articulated in FDA v. Alliance for Hippocratic Medicine and could make it easier for industries affected by regulations targeting upstream or downstream businesses to bring lawsuits. It may encourage more challenges to environmental regulations or other policies that aim to shift market behavior indirectly, emphasizing that governments cannot easily evade judicial review for policies with indirect yet predictable economic impacts.
